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Centre rules out an increase in MSP for cotton, but farmers seek more

GS Paper 3

Syllabus: Issues related to Minimum Support Prices

 

Source: TH 

Direction: The article highlights the concept of MSP – meaning, objectives, issues, etc. 

Context: While cotton farmers in several states have called for an increase in the crop’s MSP, the Centre has stated that it is monitoring the cotton output condition and will make a decision accordingly.

The concept of Minimum Support Price (MSP) in India:

 

  • Meaning: It is a policy decision not enforceable by law – a sort of market intervention by the Government of India to protect agricultural producers from a dramatic drop in farm prices during abundant output years.

 

  • Objectives:
    • It is a price guarantee for farmer’s output intended to prevent farmers from selling their crops in distress and to buy food grains for public distribution.
    • For example, if the market price for a commodity falls below the designated minimum price due to excessive production and a market imbalance, government agencies will purchase the whole quantity produced by farmers at the declared minimum price.

 

  • Announced by: The Cabinet Committee on Economic Affairs (chaired by the PM) based on the recommendations of the Commission for Agricultural Costs and Prices (CACP) at the start of the sowing season for specific crops.

 

  • Crops covered:
    • The government has announced minimum support prices (MSPs) for 22 specified crops as well as a fair and remunerative price (FRP) for sugarcane (total 23).
    • 14 kharif crops, 6 rabi crops and two other commercial crops are mandated.

 

  • Issues:
    • Lack of government machinery for procurement for all crops.
    • Majority of farmers remain uncovered under the MSP regime.
    • MS Swaminathan Commission recommendation of fixing MSP at 150% of production cost remains unimplemented.

 

Case of cotton:

  • The MSP for medium staple cotton for 2022-23 kharif season is ₹6,080.
  • Though farmers said they got prices much higher than MSP for their produce, it was inadequate given the rise in price of input items such as seeds, pesticides and fertilisers.

 

Insta Links:

MSP

 

Mains Links:

Q. What do you mean by the Minimum Support Price (MSP)? How will MSP rescue the farmers from the low-income trap? (UPSC 2018)